Dip-Buying Boeing (BA) Stock: A Step-by-Step Trade Plan Using the Levitan Method
For investors looking to capitalize on long-term opportunities, dip-buying strategies offer a compelling approach. This article presents a structured plan to purchase Boeing (BA) stock using The Levitan Method, a dip-buying strategy designed to accumulate shares at increasingly attractive prices as the stock declines, while maintaining a favorable risk-to-reward ratio.
Dip buying plan for BA stock, using the Levitan Method
Step-by-Step Buy Orders
This plan is based on dollar-cost averaging, and buying at key levels relating to the previous volume profiles. At your own risk, you buy more shares as the price declines, thereby lowering the overall cost basis. Naturally, there is also a hard stop to ensure a known and limited risk on the down side. Below are the proposed buy orders:
- First Buy Order:
- Price: $141.55
- Number of Shares: 100
- Cost: $14,155
- Percentage of Total Position: 16.67%
- Second Buy Order:
- Price: $131.55
- Number of Shares: 200
- Cost: $26,310
- Percentage of Total Position: 33.33%
- Third Buy Order:
- Price: $117.55
- Number of Shares: 300
- Cost: $35,265
- Percentage of Total Position: 50%
Once all three orders are filled, the investor will have accumulated 600 shares at a weighted average entry price of $126.22. The total cost for this position would be $75,730.
Risk and Reward Metrics
An essential aspect of any trade is managing risk. In this plan, the stop loss is set at $113.60, meaning that if the stock price falls to this level, the position would be sold, resulting in a loss of $12.62 per share. For the full position of 600 shares, this would amount to a total loss of $7,573.
On the upside, the take profit target is set at $194.37, offering a potential gain of $68.16 per share. If the stock price reaches this level, the total profit for the 600-share position would be $48,467.
With a reward-to-risk ratio of 5.40, this trade plan offers an attractive balance, making the potential reward over five times higher than the risk.
Current Market Context for Boeing (BA)
As of October 14, 2024, Boeing’s premarket price stands at $148.39, which is approximately 66% below its all-time high (ATH). The first buy order in this trade plan is set at $141.55, which represents a price 67.5% below the ATH. This strategy aims to take advantage of potential dips, allowing the investor to accumulate shares at more favorable prices as the market fluctuates.
Flexibility in Execution
One of the strengths of this trade plan is its flexibility. While the plan outlines a purchase of 600 shares, it can easily be adjusted to suit smaller portfolios or different risk appetites. For instance, instead of buying 100, 200, and 300 shares, an investor could choose to buy 10, 20, and 30 shares, maintaining the same prices and proportions. This would still result in the same weighted average entry price of $126.22, but for a smaller total investment.
Final Considerations
This dip-buying strategy offers a methodical approach to accumulate shares of Boeing stock while managing risk. However, it’s important to remember that all investments carry risk, and this trade plan is based on an opinion, not financial advice. As always, investors should do their own research and consult additional sources before executing any trades.
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